Thursday, June 25, 2015
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Lawyer’s Conflict of Interest Bars Entire Firm From Case—C.A.
Court Bars Firm From Case in Which Lawyer Served as Settlement Officer
By KENNETH OFGANG, Staff Writer
A lawyer’s participation on a settlement panel bars the attorney’s firm from subsequently representing one of the parties in that litigation, if the settlement officer received confidential information from the opposing party’s counsel, the Court of Appeal for this district ruled yesterday.
Div. Eight granted a writ of mandate overturning Los Angeles Superior Court Judge Rolf Treu’s order allowing Ballard Rosenberg Golper & Savitt to continue representing Perrin Bernard Supowitz, Inc., in its defense of a wrongful termination and Fair Employment and Housing Act suit by a former employee.
Treu ruled that the firm had established an adequate ethical wall between the settlement officer and the attorneys litigating the case. But while an ethical wall may be an adequate means of protecting client confidences, Justice Laurence Rubin wrote for the panel, it does not cure the appearance problem caused by the dual roles played by the firm’s attorneys.
Only if the trial judge determines at a subsequent hearing that the settlement officer received no ex parte communication from the plaintiff’s lawyers can the firm remain in the case, Rubin said.
Substituted In
Attorneys for Jesus Castaneda moved to disqualify Ballard Rosenberg after it substituted into the case, six months after a mandatory settlement conference failed to resolve the case.
The MSC was ordered as part of the trial court’s Civil Referee Assisted Settlement Hearing, or CRASH, program for employment cases. The program involves conferences between lawyers for the parties and a settlement panel comprised of a judicial officer and two volunteer attorneys.
One of the attorneys on the panel in Castaneda’s case was Elsa Bañuelos, then senior counsel with Ballard Rosenberg. In moving to disqualify the firm, Castaneda’s lawyers said they had disclosed settlement figures, strategic information, “and other highly confidential appraisal and evaluations” to the panel in reliance upon the confidentiality of the CRASH process.
Ballard Rosenberg responded that Linda Miller Savitt, the partner who accepted the representation, was unaware at the time that Bañuelos had been on the settlement panel. It further asserted that defense counsel was present at all times, that no confidential information was presented to the panel, that Bañuelos had not discussed the case with anyone else at the firm, and that procedures had been put in place to ensure that whatever information she had about the case would not be shared with others there.
Trial Court Ruling
Treu ruled that even assuming Bañuelos obtained confidential information, the firm had established an adequate wall against its disclosure, and denied the motion on that basis. The Court of Appeal stayed trial court proceedings pending a ruling on the plaintiff’s writ petition.
Rubin yesterday cited Cho v. Superior Court (1995) 39 Cal.App.4th 113, which held that a law firm could not represent a party in litigation in which a former judge, who had since joined the firm, had received confidential information at the settlement conference.
The court held in that case that no screening procedure “could ever convince the opposing party that the confidences would not be used to its disadvantage” that a litigant, having “bared its soul in confidential settlement conferences with a judicial officer…could not help but be horrified to find that the judicial officer has resigned to join the opposing law firm,” and that “[n] one could have confidence in the integrity of a legal process in which this is permitted to occur without the parties’ consent.”
Ballard Rosenberg’s argument that the same considerations need not apply when the confidential information has been disclosed to an attorney volunteer rather than a judge rings hollow, Rubin said.
It was unclear, the justice said, precisely what capacity a CRASH volunteer acts in.
Code of Judicial Ethics
If Bañuelos was a referee—which is what the “R” in CRASH stands for, the justice pointed out in a footnote—then the Code of Judicial Ethics applies, Rubin said. The code provides that when a judicial officer joins a law firm, the firm cannot represent a party in the same case under any circumstances other than with a waiver, and can only represent a party in a related case if the judicial officer did not receive confidential information, the justice explained.
Even if the attorney was not serving in a judicial capacity, Rubin said, ethical considerations preclude a law firm from representing a party in the same case in which one of its attorneys received confidential information as a settlement officer.
“In at least one respect, the facts of this case present a more compelling case for vicarious disqualification of the law firm than the facts in Cho,” Rubin added, because “Bañuelos did not join a firm that was already representing the employer” but “was already employed by the law firm when the settlement conference took place.”
Attorneys in the Court of Appeal were Ebby S. Bakhtiar and Carney Shegerian for the plaintiff and Linda Miller Savitt, Christine T. Hoeffner and Philip Reznik for the defendant.
The case is Castaneda v. Superior Court (Perrin Bernard Supowitz, Inc.), 15 S.O.S. 3215.
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